ARBITRATION Parties may choose to resolve a dispute through arbitration, another ADR mechanism. The procedure and parameters of the arbitration can generally be agreed on by the parties in an arbitration agreement. There are, however, statutory provisions that apply to arbitrations conducted in Ontario and Québec. In Ontario, an arbitration will be subject to either the International Commercial Arbitration Act or the Arbitration Act, 1991 . The International Commercial Arbitration Act is applicable to commercial disputes if the parties have places of business in different countries. The Act provides for arbitration based on the Model Law adopted by the United Nations Commission on International Trade Law. This model is procedurally flexible, allowing the parties involved to design a procedure that best suits them within the statutory framework. The Arbitration Act, 1991 , generally applies to purely domestic arbitrations. Under this statute, arbitrators may rule in their own jurisdiction. When a proceeding is commenced in an Ontario court in respect of a matter that is subject to arbitration, the court, on application by one of the parties, will stay the court proceeding in favour of arbitration, except in certain limited circumstances. An Ontario court may, however, make various orders to assist the arbitration process. In Québec, arbitration agreements are a recognized (nominate) contract under the Civil Code of Québec and do not require formal recognition to be enforceable. Arbitrators have the power to decide matters relating to their own competence (or jurisdiction). When an action is taken before a court and the parties have an existing arbitration agreement regarding the subject matter of the dispute, the court may refer the case to arbitration if so requested by one party before the case
is set down for trial and if that party has not submitted to the jurisdiction of the court. A judge cannot interfere with the arbitration process except where specifically authorized by the Civil Code of Québec , but may grant provisional measures to assist the arbitration process on a motion of a party. The procedure of an arbitration conducted in Québec is governed by the contract or, failing that, by the rules contained in the Civil Code of Québec . Costs and Recovery of Litigation Expenses In both Ontario and Québec, a portion of a party’s litigation expenses may be recovered through an award of costs. Costs are normally awarded to the successful party, but the court has the discretion not to award costs or, in extraordinary circumstances, even to award them to the losing party. The court may consider various factors in exercising its discretion to award costs, including the complexity of the proceeding and the conduct of any party that tended to unnecessarily prolong the proceeding or that was improper, vexatious or unnecessary. The costs awarded by the court usually do not cover the full legal expenses incurred by the party. In Ontario, costs include both lawyers’ fees and out- of-pocket disbursements and are awarded on either a “partial indemnity” basis or a “substantial indemnity” basis. Substantial indemnity costs are typically calculated at 1.5 times partial indemnity costs and are generally only awarded to sanction improper conduct of one of the parties. When deciding the issue of costs, Ontario courts will also consider a written offer to settle made by one party before trial.
160
Doing Business in Canada
Powered by FlippingBook